Why Twitter's Head Engineer Made $10 Million This Year — Almost As Much As The Company's CEO

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It's no secret that the competition for tech talent in Silicon Valley is extremely tough. Some companies have resorted to offering employees tens of thousands of dollars for engineering referrals.

But even in that context, the more than $10 million in stock awarded to Chris Fry, Twitter's senior vice president for technology, revealed in the company's pre-IPO regulatory filings, is pretty incredible.

Fry's pay is just short of the $11.5 million that CEO Dick Costolo was awarded and well outstrips the $6.7 million Adam Bain made as president of revenue, making him the second most highly paid person at Twitter.

He's making out like a bandit because he has a rare combination of skills, is in an environment where even normal engineers can expect salaries well above $165,000, and because Twitter wants him to stick around.

This sort of pre-IPO award for an engineer is not unheard of. Facebook's VP of engineering took home more than $24 million in stock, according to Reuters, but Facebook was making billions — 10 times as much money as Twitter is.

Fry has only been with Twitter for a little over a year. He left Salesforce in April 2012 as an engineering VP in charge of infrastructure and platforms, and was elevated to his current job heading up all engineering for Twitter in March.

So why did Fry get such a massive payday?

He is apparently a brilliant engineer. According to former colleagues cited by Reuters, he's an example of a legendary "10x" engineer, a single person who does as much work as 10 average engineers.

Fry also holds more than 10 patents, some dating back to his time as a student and others from his time at Salesforce, as well as a Ph.D. in Cognitive Science.

His job history points to his ability as well. At Salesforce, he never spent more than two years in a role, rising from an engineering manager for Web services to the senior vice president in charge of all development at the rapidly growing technology company.

He managed hundreds of engineers across a huge variety of divisions. That sort of experience is incredibly valuable, especially for a company like Twitter that's so dependent on its user experience and continuing to innovate.

But what truly sets him apart isn't that he's a great programmer, it's that he's one of the few great programmers who is also exceptional at managing and motivating people. A particularly telling example can be seen in a program he oversaw at Salesforce and its results.

In 2006 along with Steve Greene (now a senior director at Twitter), Fry met with Parker Harris, a Salesforce co-founder then in charge of proposing a pilot program to transition a small team from traditional "waterfall" development to a new system called "agile" development.

Waterfall development is more centralized, based on a predetermined plan and budget, and pushed along by customer-facing product managers. Agile, or scrum development, focuses on using small, cross-functional teams that engage in "sprints" to push out releasable features after just a month.

Instead of sanctioning their small pilot program, Harris tasked them with transforming the company.

Harris wanted to take the "big bang" approach to the transition because productivity had massively declined as headcount grew, and there had been a recent, damaging infrastructure failure.

Morale was bad too. Here's how Fry described the situation for a case study on the transition:

"There'd be a weekly meeting for each team. Everyone would show up and discuss all the problems for an hour, and then just go back to their desks. There was no accountability. You'd go to all the feature team meetings you were assigned to, and the next week you'd go back and say, 'What was it I promised to do?' And nobody was tracking if you were on 20 teams or just one."

They transitioned about 30 teams of engineers — over 200 people — and basically the company's entire product R&D staff in just three months. It was one of the largest and fastest such transitions that had ever occurred at the time. The pair describe their "all-in" approach at greater length in a paper available on Fry's website, and the results were pretty spectacular.

It all goes to show that Fry has a proven track record and ability to not just program, but lead the people who do. And that's exactly the situation Twitter finds itself in; it's a rapidly growing company afraid of losing the edge that made it so successful.

That combination is rare and highly desirable, according to Peter Kazanjy, the CEO of TalentBin, a First Round Capital-backed startup that specializes in tracking down "unfindable technical talent" using big data.

"In the case of leadership, this is all the more of a rarefied crowd, where you're now mixing key technical skill requirements with managerial skill requirements," Kazajny says. "The result is lots of demand chasing not a lot of supply, and prices going through the roof, accordingly."

Beyond Fry's particular talents, the second part of the equation is the overall environment in Silicon Valley.

"Generally speaking, high quality engineering talent is increasingly in demand, and to date, has been substantially scarcer than the market would like," Kazanjy told us. "We see this manifesting in one form with our customers who go to great lengths paying salespeople-like recruiters to proactively scour the web and recruit those high-value technical candidates, but the discovery and persuasion phase invariably leads into high compensation as well."

Prices are so high because of that massive demand. They're also high because of the hugely lucrative option of founding a startup.

In 2008, Twitter bought the search engine Summize. They paid Summize's investors and the co-founders $15 million, which is a large amount of money, but not a huge price for a startup. About $10 million dollars worth of that offer wasn't cash, but Twitter stock. That stock, though split among several people and investors, is now estimated to be worth hundreds of millions.

The rewards for founding a company and taking it through an IPO are even greater, as illustrated by the billions Twitter's founders stand to make.

Almost all of Fry's pay is in restricted stock units, which means that they're tied to certain conditions. One of the most common conditions is that the employee stay at the company for a certain amount of time. His salary last year was $145,513 with a $100,000 bonus, and his base salary will rise to only $250,000 according to the company's amended S-1. It seems likely that this big payday was a one-time award structured in order to make sure it's in his interest to stay at the company for a while.

Twitter is a company that intends to grow — a lot. Fry has particular expertise in managing that, and the speed and size of his promotion in March would seem to indicate that Twitter's management likes and values him a great deal.